SAN JOSE, Calif.–(BUSINESS WIRE)– QuantumScape Corporation (NYSE: QS, “QuantumScape,” or “Company”) is announcing that as a result of recent guidance provided by the SEC on April 12, 2021 regarding the accounting and reporting of warrants issued by SPACs (the “Staff Statement”), it will restate its consolidated financial statements as of and for the year ended December 31, 2020 to change the accounting treatment of its public and private placement warrants (“Warrants”).
There will be no cashimpact to QuantumScape’s business or historical financial statements in the affected period due to this restatement. The change in the accounting treatment of the warrants has no effect on QuantumScape’s ongoing operations or future plans.
The restatement pertains to the accounting treatment for Warrants that were outstanding at the time of the business combination of the legacy QuantumScape Corporation with Kensington Capital Acquisition Corp. on November 25, 2020 (the “Business Combination”). Consistent with market practice among SPACs, these Warrants had previously been accounted for as equity. In consideration of the Staff Statement, QuantumScape intends to restate its historical financial statements to account for the Warrants as liabilities. These Warrants will be marked to market with non-cash fair value adjustments recorded into earnings at the end of each reporting period. The Company preliminarily estimates that the change in accounting method will cause the liabilities on the restated QuantumScape balance sheet as of December 31, 2020 to increase by approximately $675 to $705 million, additional paid-in-capital to decrease by approximately $95 to $125 million, and non-cash non-operating expenses in the Statement of Operations for the three and twelve months ended December 31, 2020 to increase by approximately $565 to $595 million. The change in the accounting treatment of the Warrants does not change the Company’s previously disclosed non-GAAP operating metrics for the three and twelve months ended December 31, 2020. These estimates are preliminary and subject to change as management completes the restatement. Our independent registered public accounting firm has not audited or reviewed these estimates.
The following provides additional detail regarding how we currently anticipate the restatement will affect our various financial statements:
As of March 31, 2021, QuantumScape had approximately 8.7 million Warrants outstanding, which represent less than half of the 18.1 million Warrants originally issued by Kensington Capital Acquisition Corp. The Company anticipates that the incremental non-cash non-operating expense on its Statement of Operations related to the Warrants will be approximately $20-$40 million for the three months ended March 31, 2021.
QuantumScape intends to complete the restatement of its consolidated financial statements as of and for the year ended December 31, 2020 within the next two weeks.
About QuantumScape Corporation
QuantumScape is a leader in the development of next generation solid-state lithium-metal batteries for use in electric vehicles. The company’s mission is to revolutionize energy storage to enable a sustainable future.
For additional information, please visit www.quantumscape.com.
Management’s Use of Non-GAAP Financial Measures
The information in this press release letter references certain non-GAAP financial measures as defined by SEC rules. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
This article contains forward-looking statements within the meaning of the federal securities laws and information based on management’s current expectations as of the date of this current report. All statements other than statements of historical fact contained in this article, including statements regarding the future development of QuantumScape’s battery technology, the anticipated benefits of QuantumScape’s technologies and the performance of its batteries, and plans and objectives for future operations, are forward-looking statements. When used in this current report, the words “may,” “will,” “estimate,” “pro forma,” “expect,” “plan,” “believe,” “potential,” “predict,” “target,” “should,” “would,” “could,” “continue,” “believe,” “project,” “intend,” “anticipates” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.
These forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions, and strategies regarding future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Many of these factors are outside QuantumScape’s control and are difficult to predict. QuantumScape cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Except as otherwise required by applicable law, QuantumScape disclaims any duty to update any forward-looking statements. Should underlying assumptions prove incorrect, actual results and projections could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that could materially affect QuantumScape’s actual results can be found in QuantumScape’s periodic filings with the SEC. QuantumScape’s SEC filings are available publicly on the SEC’s website at www.sec.gov.
Pamela Fong is QuantumScape’s Chief of Human Resources Operations, leading people strategy and operations, including talent acquisition, organizational development and employee engagement. Prior to joining the company, Ms. Fong served as the Vice President of Global Human Resources at PDF Solutions (NASDAQ: PDFS), a semiconductor SAAS company. Before that, she served in several HR leadership roles at Foxconn Interconnect Technology, Inc., a multinational electronics manufacturer, and NUMMI, an automotive manufacturing joint venture between Toyota and General Motors. Ms. Fong holds a B.S. in Business Administration from U.C. Berkeley and a M.S. in Management from Stanford Graduate School of Business.